The Region and the World: the Case of Nizhnii Novgorod

Eidgenössische “Regionalization of Russian Foreign and Security Policy” Technische Hochschule Zürich Project organized by The Russian Study Group at the Center for Security Studies and Conflict Research Andreas Wenger, Jeronim Perovic,´ Andrei Makarychev, Oleg Alexandrov WORKING PAPER NO.6 MAY 2001 The Region and the World: The Case of Nizhnii Novgorod DESIGN : SUSANA PERROTTET RIOS This paper gives a thorough account of the factors that foster or inhibit Nizhnii By Andrei S. Makarychev Novgorod’s efforts to become a player in the national and international arenas. The author of this study sees opportunities and hurdles for the region’s integration into international economic (but also political and social) structures. This process, which started in the early 1990s, was much more lengthy and time consuming than was ini- tially expected. There have been objective reasons for this development (the general crisis of the Russian economy, lack of a globally oriented sector of the regional market) as well as subjective ones (foreign policy misperceptions of local elites, admin- istrative inertia and lack of well-trained managers). The author argues that the region’s economic and financial projects might in the future realistically be integrated into a wider international geopolitical and geoeconomic framework. Thanks to a rel- atively liberal leadership, experiences in the field of international cooperation and the strong presence of foreign economic actors in the region, business professionals and policy-makers from Nizhnii Novgorod are gradually adapting to the basic norms and rules of the international business and political community and understand the necessity to improve the quality standards of domestic production. Contact: Center for Security Studies and Conflict Research ETH Zentrum / SEI CH-8092 Zürich Switzerland Andreas Wenger, head of project [email protected] Jeronim Perovic´ , project coordinator [email protected] Oleg Alexandrov [email protected]; [email protected] Andrei Makarychev [email protected]; [email protected] Order of copies: Center for Security Studies and Conflict Research ETH Zentrum / SEI CH-8092 Zürich Switzerland [email protected] Papers available in full-text format at: http://www.fsk.ethz.ch/ Layout by Marco Zanoli The Region and the World: The Case of Nizhnii Novgorod contents Foreword 5 Introduction 7 By Andrei S. Makarychev 1. Regional security and international integration 11 1.1. Economic security 11 1.2. Ecological security 12 1.3. Military and technological security 13 1.4. Military conversion projects 15 1.5 Information and security 16 1.6 Law enforcement 17 2. Agents of globalization in the region and resources for internationalization 19 2.1. Regional administration 19 2.2. Municipal authorities 26 2.3. Individual enterprises 30 Working Paper No. 6 2.4. Foreign actors and their projects 32 3. Relations with the federal center 45 3.1. Federal institutions in the region 45 3.2. NNO as a part of the Volga Federal District 49 4. Problems of international cooperation at the regional level 55 5. Implications and scenarios 65 Foreword This case study explores the situation of Nizhnii Novgorod Oblast in the national and international context. Nizhnii Novgorod is an important region for several reasons. First of all, it plays a significant political and economic role both in the Volga Federal District (with Nizhnii Novgorod as its capital) and in the “Greater Volga” interregional economic association. It hosts industries with strong export potential such as oil and gas refineries, chemical plants, metallurgy and car build- ing. Second, prominent personalities such as former governor Boris Nemtsov and Sergei Kirienko (now head of the Volga Federal District) are closely associated with the region and have contributed to its image as one of the most reform-oriented and liberal regions of Russia. Although the territory was a closed area until 1990, Nizhnii Novgorod is clearly one of the regions that are interested more than others in international cooperation, not only in the economic sphere, but also in terms of “global net- working” among scholars and the development of international cultural contacts. Although there are obstacles to Nizhnii Novgorod’s international integration, Andrei Makarychev, Professor of International Relations at Nizhnii Novgorod Linguistic University and a member of the Russian Study Group at the Center for Security Studies and Conflict Research at the Swiss Federal Institute of Techno- logy (ETH) Zurich, sees good chances that the region’s economic and financial projects might be integrated into a wider international geopolitical and geoeconomic framework in the future. Makarychev analyzes the various strategies pursued by different economic actors in Nizhnii Novgorod trying to adjust to global practices, standards and rules. Some of these actors are looking to expand the market for their products, while others work hard to find international investors. Yet protectionist attitudes 6 Andrei S. Makarychev are also prevalent in those sectors that fear competition should the market be opened. This paper also serves as an example of how land-locked regions such as Nizhnii Novgorod deal with new security challenges, whether they be illegal migration, drug trafficking, smuggling, or illegal business practices. The author shows that the integration of regions into the web of international cooperation is not an easy task. The international roles of the newly created federal districts are also ill defined. All this suggests that subnational units in Russia are still in search of their international identities. The paper is the sixth in a series of working papers written in the context of the project “Regionalization of Russian Foreign and Security Policy: Interaction between Regional Processes and the Interest of the Central State”, funded by the Swiss Federal Institute of Technology (ETH) Zurich. All the studies in this series are available in full text at http://www.ethz.ch. Introduction* Zurich, April 2001 Studying the case of Nizhnii Novgorod Oblast (NNO) as a regional actor in the wider international context is worthwhile for various reasons. First of all, this Prof. Dr. Andreas Wenger region was a closed area up until 1990 due to the military importance of its indus- try in Soviet times. Throughout the 1990s, Russia experienced a period of grad- Deputy director of the Center for Security Studies and Conflict Research ual adjustment of the regional elites and institutions to the international environment. NNO began to reclaim its historical reputation as the commercial “pocket of Russia”. Second, during the 1990s, the region experienced two different patterns of governance: the first, explicitly liberal and innovative, was associated with the first post-Soviet governor, Boris Nemtsov, while the second governor, Ivan Skliarov, was much more conservative and traditional. Under Nemtsov, NNO became a laboratory of economic reform and worked towards privatization and economic reforms in close cooperation with the World Bank, the International Finance Corporation, the British Know-How Fund, the US Peace Corps, the Inter- national Executive Service Corps, the Citizens Democracy Corps, the Eurasia Foundation, and numerous Western non-governmental organizations (NGOs). The investigation of the transition from a closed region to one of the regional pio- neers in market reforms, and of the “post-Nemtsov” era, enables us to trace the evolution of NNO from the viewpoint of both domestic and foreign policies. * The Author is thankful to Open Society Institute International Policy Fellowship Program (2000-2001) and IREX/ECA Alumni Grant Program for supporting this research. Special thanks to Dr. Andreas Wenger and Jeronim Perovic for their thoughtful comments and re- commendations, and to Marco Zanoli for layouting the publication. 8 Andrei S. Makarychev The Region and the World 9 Third, a number of politicians from Nizhnii Novgorod were promoted to the low-income groups has been significantly increased. It is also reported that in federal government from 1997 onwards. Sergei Kirienko (who was prime minis- NNO, official statistics and documents are difficult to obtain.3 ter in 1998) and Boris Nemtsov (leader of the Union of the Right Forces party What is missing in the reports mentioned above is an account of the domes- which finished fourth in the 1999 parliamentary election) are the two most promi- tic mechanisms fostering or inhibiting the region’s adaptation to the global arena, nent of these. an analysis of the main actors and institutions maintaining the region’s foreign Fourth, in May 2000, Nizhnii Novgorod was selected by President Vladimir relations, and an assessment of the potential of each of these. My attempt in this Putin as the center of the newly created Volga Federal District (VFD), one of seven paper is to further the expertise on the international participation of NNO to federal districts in the country. This distinguished NNO’s political credentials include these new issues, to discuss the basic problems existing in this field, and from those of the neighboring regions. As the “capital” of the VFD, Nizhnii Nov- to outline some perspectives for the near future. Apart from studying official gorod had a new opportunity to become one of the locomotives of Russia’s tran- documents, statistics, and regional media, I have also conducted a series of sur- sition. New models of governance are being explored, and solutions

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